'Wet DBA' Model agreements with tax and custom administration no longer valid
The model contracts approved by the tax authorities that allow independent contractors to contract with clients without being a taxable employment relationship will lose their validity this year. The Social and Economic Council (SER) has further issued advice to reduce tax facilities for the self-employed entrepreneurs in order to discourage self-employment.
In the recent weeks the discussion in the media has been high again about the position of self-employed persons.
In the SER (Social Economic Council) advisory report that appeared this week, self-employed workers below an hourly rate of € 30-35. The self-employed a legal presumption of employment will arise when hiring deduction for IB entrepreneurs (sole proprietorship) should lapse in the SER proposals. This seems to lead to the necessary concern among self-employed persons and their clients. Another important point that contributes to this commotion is that also the model agreements approved by the tax authorities will gradually lose their validity this year without a clear solution at hand. The implementation of the SER advice is still in the future, with many aspects to be worked out in more detail. The expiration of the model contracts, on the other hand, is concrete and topical. We therefore consider some clarification regarding this last point to be appropriate.
With the introduction of the Assessment of Employment Relationships (Deregulation) Act ('Wet DBA') in May 2016, the tax legislation concerning the hiring of self-employed persons has been tightened. If an employment relationship can be equated with a (fictitious) employment relationship, the client/employer must withhold and pay payroll taxes, consisting of wage tax and social security contributions. In order to offer a solution to the uncertainty of clients and contractors that arose with the introduction of the 'Wet DBA', the Tax and Customs Administration has approved various model agreements at the request of industry associations and individual companies and published them on the website of the Tax and Customs Administration. Approved model agreements are published by the Tax and Customs Administration stating the approval number and expiry date in the DBA agreements register reg_overeenkomsten_dba_dv10813z19ed.pdf (belastingdienst.nl).
If a principal and a self-employed person use a model agreement - and act in accordance with the model agreement - the principal is, in principle, exempt from withholding and remitting payroll taxes. However, the model agreements approved by the Tax and Customs Administration as of 2016 have a validity period of five years. Various Model Agreements from this year onwards will therefore also expire in 2021. As of their expiration date, the model agreements in question no longer provide indemnification. from the moment that the expiration date has expired. There is no question of an automatic extension of the model agreements. Meanwhile, a number of branch organizations, but also a number of individual companies have extended the term of their model agreements.
Most model agreements state that the parties (the self-employed person and the client) do not intend to enter into an employment contract. The Dutch Supreme Court recently ruled (6 November 2020 ECLI:NL:HR:2020:1746) that the intention of the parties no longer plays a role in determining whether the agreement must be regarded as an employment contract. From now on, the Tax and Customs Administration will take this into account when applying for an extension or a new request for approval of a submitted model agreement.
The enforcement moratorium applies until 1 October 2021. This means that the Tax and Customs Administration will not impose any retrospective payroll tax and/or adjustment obligation if the Tax and Customs Administration is of the opinion that an employment relationship qualifies as (fictitious) employment, unless the client has malicious intent or fails to follow instructions from the Tax and Customs Administration (in a timely manner). Because the duration of the enforcement moratorium seems to be linked to the entry into force of the new laws and regulations replacing the 'Wet DBA', we expect a new extension of the enforcement moratorium.
In the meantime, we advise you to submit the model agreement you are using, insofar as its validity will soon expire or has expired, to the Tax and Customs Administration. In the absence of new legislation, we assume that the general model agreements "no employer authority" and "free replacement" will remain valid for the time being.
Should you have any questions on this subject, please contact us or your regular contact.